How to protect your capital with a high-yield real estate investment
At an economic level, the current situation is characterized by record-breaking inflation, which has reached peaks of 10% in Europe and the USA, as it has not happened for over 40 years, and seems destined to remain well above 2% for a long time. Beyond the causes, which can be simplified as over a decade of expansive policies by major central banks, the post-COVID boom years, the energy crisis in Europe, and the overheating of the US economy, to understand the phenomenon and how to manage it, it is important to focus on the effects.
One of the main effects is the loss of real value that erodes the savings and assets of individuals and families, with liquidity condemned to devalue year after year. In this scenario, the only way to defend oneself is through investments.
Investing to protect against inflation
Stock markets, during this period, are characterized by strong volatility. After a 2022 marked by strong losses, 2023 opened with calm (and recoveries) in January, before the March storm. The bond market is less volatile but negative, with government and corporate bonds pushed down by the biggest increase in the cost of money by Central Banks to try to reduce – without much success – inflation. Even commodities, whose prices had definitely heated up in 2022, are retracing. In this scenario, the main cryptocurrency, namely Bitcoin, has managed to lose almost 2/3 of its value from April22 to December22, and then recover more than 60% from December22 to April23. Result? -38% in one year.
Real estate investment as a safe haven asset
If financial investments (otherwise known as “movable assets”) do not seem capable of protecting against inflation, nor even safeguarding the nominal value of assets, hope comes from real estate as a safe haven asset.
It is common experience that in recent years – even before the inflation phase we are experiencing – prices for the purchase and, above all, for the rent of homes have done nothing but grow, with an acceleration in recent times, as far as rentals are concerned. This is quite physiological, since rental fees are a component of the basket on which inflation is measured. Therefore, the increase in rents is both an effect and a cause of inflation.
Income property owners, therefore, seem to be the only “winners” in an economic situation characterized by inflation. On the one hand, they have not suffered increases in expenses, since the only expense was made at the time of purchase. On the other hand, with each new tenant, they can demand ever higher rent fees.
The US rental real estate market
Among all real estate markets, the US market confirms itself as the most advantageous for investors worldwide. This is due to some of its peculiarities:
• most working-age citizens do not buy homes and live in rental properties to be ready to move to a different city or state, if necessary for work reasons
• in case of default, laws protect the property owner more than the delinquent tenant
• in every city, there are multiple property management companies that handle the complete property management, including tenant screening and rent collection
• the market is very dynamic with reduced turnaround times for both sales and rentals
• investments enjoy a certain currency stability linked to the dollar.
Investing in income properties in the United States with Opisas
Since 2008, Opisas has been offering high-yield real estate investments to its international clients in areas with interesting urban development, such as various locations in Florida and cities like Detroit, Philadelphia, and Baltimore. Thanks to renting, these investments yield between 5% and 8% annually, not counting inflation, in addition to the appreciation of the properties. Thus, offering a double protection of the invested capital.
If you would like to learn more and discover the opportunities currently available in the USA, you can write to contact@opisas.com to schedule an appointment with a consultant.
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